Still Dodging Our Harsh Budget Reality

Steve Chapman

11/3/2011 12:01:00 AM - Steve Chapman

For the next 12 months, Americans will be in suspense waiting to find out who will win the presidential election and thus determine the fate of the nation for years to come. Too bad that by then, it may not matter so much.

That's partly because presidents must work within narrow confines established before they arrived. It's also because this month, a decision will be made that will have large and lasting consequences, for good or ill.

I refer to the vote by the congressional supercommittee assigned to find a way to reduce the deficit over the next decade. Its success could be a boon to the economy, the next generation of taxpayers and the health of our democracy. But if you're a betting person, bet on failure.

The group, after all, is set up on the assumption that failure is a real possibility. It's charged with finding at least $1.2 trillion in deficit cuts, but since membership is split evenly between Republicans and Democrats, a majority vote for any package will be elusive if not impossible.

If they can't agree, a backup program will go into effect. Automatic cuts of nearly a trillion dollars would take place, coming mostly out of cuts in discretionary domestic spending and defense outlays.

The automatic cuts were imagined to be so excruciating that the supercommittee would have no choice but to agree on a plan. In reality, they are clearly the least painful option, making them hard for politicians to resist.

Doing nothing, which would trigger "sequestration," offers powerful attractions to both Republicans and Democrats. It gives Republicans their inviolable demand, because it doesn't raise taxes. It lets Democrats protect the entitlement programs (Social Security, Medicare and Medicaid) they prize above all else. It lets both pretend to have done something about our swelling federal debt.

But will this option actually reduce expenditures in the programs affected? "No, no, no, no," replied Veronique de Rugy, a researcher at George Mason University's Mercatus Center, when I asked her. "Spending increases quite dramatically."

Defense outlays would rise by 18 percent over 10 years. Nondefense discretionary spending (for everything from education to national parks to law enforcement) would grow by 12 percent.

Besides, the automatic cuts are not carved in marble. Defense Secretary Leon Panetta opposes those for defense. So does Arizona Republican Sen. John McCain, who says, "Congress is not bound by this -- it's something we passed; we can reverse it."

Other GOP senators and House members have come out for repealing the triggers. They may find plenty of allies among Democrats who want to hold domestic programs harmless.

Repudiating the whole budget plan right away might be too blatant for either party to embrace. But critics in Congress know that over time, it's not hard to find ways to circumvent, relax or scrap the original requirements.

That's the bad news. The worse news is that even if the supercommittee were to approve a plan, we would not be making progress, but merely buying time.

Cutting $1.2 trillion from the deficit over 10 years would mean the federal debt would continue to grow. The supercommittee, according to the bipartisan Committee for a Responsible Federal Budget, needs to double or triple the savings "to put debt on a clear, downward path by the end of the decade."

Getting that amount of deficit reduction would require each party to swallow something it abhors. For Republicans, it's tax changes to boost federal revenue. For Democrats, it's reductions in what retirees will get from Social Security and Medicare.

Democrats on the supercommittee reportedly would be willing to ratify a "grand bargain" to reach $3 trillion in deficit savings. But Republicans rejected the idea because it would include tax increases.

That's a poor excuse. The burden of the federal government is a function of how much it spends, not how much it taxes. Averting a tax increase is no bargain if it means letting outlays continue their upward climb, carrying the nation to fiscal ruin.

There is no guarantee that the Democrats would really accept significant curbs on their favorite programs. Republicans, however, could only gain from insisting that Americans pay for all the government they get -- and get only what they are willing to pay for.

But politicians and their constituents generally resist unwelcome changes until harsh reality forces them to change. The longer we wait the harsher it will be.